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COMMENTARY

The ATM at 100, a forecast for 2017–2067: Part 2

... What is happening with cardless cash, iBeacons and app-based ATM automobiles is that the ATM is becoming more dynamic. Its journey of reinvention into a nimble, intelligent consumer banking touch point has begun.

This transformation process in our industry is likely to accelerate when new artificial intelligence programs are incorporated into ATM software, expanding the range and types of services that will be available.

At the same time, artificial intelligence will provide big data analysis capability for ATM deployers to improve efficiencies, security and to automate sophisticated customer services such as financial advice.

A recent report by Tata Consulting Services, based on research from 13 different global industries across four regions of the world, found that 32 percent of companies already use AI in customer services, 29 percent in sales, 29 percent in marketing, 27 percent in finance and accounting, and 23 percent in R&D.

AI works through machine learning, whereby the computer can make improved decisions based on all the data it can continuously process at breakneck speeds. This will mean more targeted and personalized advice and service to customers. Live tellers via video at ATMs could well be augmented in future by avatars operated by AI.

"There's a great opportunity to turn users' interaction with the ATM from a mere transaction to an engagement tool," says Andy Mattes, president and CEO of Diebold-Nixdorf. "Our industry will innovate more in the next five years than we've done in the past 50."

Overall, taking all these developments into account, we can say that the whole concept of ATMs is shifting from simple vending to smart, dynamic banking. The ATM will become a "bank in a box," able to carry out most transactions and advisory services currently provided by a branch, sometimes through the increasingly popular self-service technology of video-conferencing.

CaixaBank ATMs in Spain and Garanti Bank ATMs in Turkey can already offer around 200 different transactions. Worldwide, there's a vast array of value-add ATM services, from tax payments to charity donations; from remittances and fund transfers to cash deposits; from social benefits payments to cash recycling; from printing tickets and coupons to paying fines; and from opening new accounts to arranging loans and mortgages.

These smarter ATMs will be especially crucial in a time of shrinking branch networks. Britain alone has lost half of its bank branches since 1989, and bank branch closures have accelerated since the 2008 financial crisis.

Not that the branch will ever become extinct. But branches are becoming smart, retail-style places with video teller services, robo-advisers, self-service devices and some live customer services personnel offering high-level advice.

Next-generation ATMs will be linked to application programming interfaces and cloud architecture. APIs and the cloud will allow ATM services to grow and to get to market much more quickly.

There will be payment hubs possible at these levels of software to provide a variety of payment types at ATMs. There will be account management hubs where a customer can carry out a range of financial services transactions including managing insurance policies, mortgages, funeral policies, loans, etc.

In addition, API ATM ecosystems will function as information hubs using AI and big data analytics to provide information about — and for — customers. The new generation of ATMs will locate AI capacity at the level of APIs or in the cloud, where it can be used to secure systems against hacking.

I can attest to the great degree of consensus on next-generation ATMs among major vendors, banks and independent operators. We foresee an increasingly interoperable API ecosystem supporting an app-based model for ATMs.

In an era of smart consumer banking, the AI-enabled ATM becomes a data point as well as a customer transaction terminal. NCR's Bill Nuti has articulated this point:

"As one more of the connected devices that provide digital experiences, the ATM will be a great source of behavioral and transactional data that financial institutions can use to provide highly personalized recommendations to consumers and make better business decisions for their own organization."

The data-rich ATM will continue to complement other bank channels — and not just the mobile channel. Francesco Burelli, managing director of Accenture Payment Services, sees ATMs as a support for online banking, too, providing a "physical touchpoint for banks to service its customers."

Already, digital wallet transactions with the likes of Android Pay, Apple Pay and Samsung Pay are possible at cutting-edge ATMs. The more ATMs become a hub for connecting online and mobile channels, the stronger their future will be.

Implementing a global blueprint for an API app model over the next few years will provide a whole new generation of relevant ATMs.

As this next era, in turn, enters maturity in the late 2030s, there will already be technologies, such as advanced and miniaturized robotics, chip implants and renewable energy systems, as well as technologies that do not yet exist, but which the ATM will be ready to absorb, just as it has integrated cards, biometrics and mobile channels throughout its evolution.

However, before we become too futuristic, let's remember the saying of Jean-Baptiste Alphonse Karr, the 19th century French writer who said "plus ça change, plus c'est la même," that is, "the more things change, the more they stay the same."

Often, for example, digital assets and digital transactions end up being converted into tangible assets such as cash. Examples of this financial "gravity" effect include digital wallet transactions at ATMs; bitcoin ATMs, where cash can be exchanged for bitcoin and vice versa; cash-on-delivery services for online orders; P2P money transfers via ATMs; cash fulfilment of M-Pesa mobile money transfers; PayPal payments; and Uber Cash programs.

Although the ATM is becoming a consumer banking touchpoint, it still carries out the original goal of its co-inventor, John Shepherd-Barron, who envisioned the machine as a means to dispense cash on the high street.

Cash, growing in terms of currency in circulation at rates significantly higher than average GDP rates, definitely isn't going into the museum in this generation or the next. It has proved one of history's most endurable and popular technologies and has been the most dominant form of money ever.

Given that cash is not "broken" and that there is no compelling business case to remove cash, I can safely assume it will still be needed in 2067. As Cardtronics CMO Tom Pierce points out, "Even as consumers embrace the digital transformation of banking and retail, there continue to be a multitude of instances where cash is still exactly what people want — and increasingly they want it on-demand. The ATM is emerging as the vital physical component of the digital model."

When the ATM becomes a centurion on June 27, 2067, it will have evolved into a complete bank in a box, intelligently connected to the home, the bank, digital channels, satellites, sensors and, most of all, to the customers it will have served for 100 years.